By Eddie Borgen, Realtor
Buying your first home is comparable to the first time you ride a bike. You can learn how it works from your parents and observe it from a distance, but you really won’t know the ins and outs until you sit down on the bicycle and start riding.
Like most beginners, first-time homebuyers will likely make a few mistakes as they initially go through the home-buying process in the upcoming year. Here are five mistakes first-time homebuyers often make, and how to best avoid them.
- Waiting too long to make an offer
One of the biggest mistakes first-time homebuyers will make in 2017 is waiting too long to get into the real estate market, according to Eddie Borgen, a local realtor in Loudoun County. Because the rates look like they’re going to continually increase over the year, buyers should get in as early as they can to avoid paying more later on.
- Trying too hard to get less than the asking price
Many first-time buyers are tech-savvy and comfortable researching homes on their own. Overall, these are positive traits in a buyer. However, because these buyers are typically self-sufficient when it comes to purchases, they often think they know best when it comes to what price they want to offer on a house.
“Buyers rely too much on what they see on the internet instead of the good advice of what they would hear from a real estate agent,” Borgen says.
While sometimes it pays off to be bold in an offer, often the buyers negotiate themselves out of a deal. Pay attention to your real estate agent, who is a seasoned professional, when it comes to putting in an offer so you don’t offend the seller and lose the house you want.
- Not exploring all your financing options
Borgen says many first-time buyers have grown up thinking they need to save up for a 20 percent down payment before they can enter the housing market. While it is always great to have as much money to put down as possible, many new options are available.
One option is a home ownership investment program, which typically provides up to half of the down payment you need. The money is an investment in the home, not a loan, so there are no interest charges or monthly payments. This new type of financing – which works in combination with a traditional 30-year mortgage – can offer greater flexibility and control to the home buyer. It allows you to cut the time needed to save for a down payment in half, lower your monthly payments and avoid mortgage insurance, or increase your purchasing power so you can buy the home you want.
- Wanting the dream house right away
Everyone has a picture in their minds of what their first home will look like. Whether you envisioned a craftsman bungalow near all your favorite bars and restaurants or a classic ranch-style home with tons of land and no neighbors, chances are you’re going to have to trade up to that dream home from your first starter home.
“If you really like the house, you probably can’t afford it. If you think the house is just kind of below what you want it’s probably right in your price range. Get in the market rather than wait to get the dream house,” Borgen says.
Borgen advises those in the hunt for their dream home to focus on becoming homeowners now and to wait on their dream home until they have built up equity and have higher incomes in the future.
- Not having your own representation
Another mistake a first-time homebuyer can make is not having their own representation (meaning they use the seller’s agent as their own buyer’s agent). While this is not always a bad situation, BOrgen urges buyers to select a trustworthy real estate agent who will look after their best interests.
“Most buyers, even experiences, have no clue that if they call an agent and just have that agent show up for a new construction home, they save thousands,” Borgen said.